A self-attested address is proof enough to open an a/c

TNN|

Nov 15, 2006, 02.54 AM IST

0Comments

MUMBAI: Opening a bank account is likely to be made easier, with the Reserve Bank of India (RBI) planning to ease the `Know Your Customer' procedure for banks.

"RBI will issue clarifications in respect of the conduct of KYC procedure for normal accounts to make it more customer friendly," the central bank said in its annual report on trend and progress in the banking sector.

By easing the KYC procedure, the central bank is aiming at reconciling its multiple objectives of making sure that everyone has access to a bank account, deposit mobilisation by banks rise and at the same time making certain that accounts are not opened under fictitious names to facilitate money laundering.

RBI has said that while the poor will find it difficult to access financial product, there is one area where they could have more relaxation in terms of regulation.

"One area that calls for greater latitude in this regard is the range of identity documents that are acceptable to open an account with a bank. Keeping this in view, the RBI, in its Mid-term Review for '06-07 released in October '06, relaxed the KYC procedure for small accounts. It was proposed that for opening small accounts, banks need to seek only a photograph of the account holder and self-certification of address," the central bank said.

Another reason why RBI wants to ease account opening procedure is to ensure that banks raise more deposits. "In India, the ratio of bank assets or bank deposits to GDP is among the lowest in the world, notwithstanding some increase in recent years," RBI said.

It added that as the economy begins to grow rapidly and an increasing number of people migrate out of the poverty levels, the rate of financial intermediation of savings is expected to increase further. In other words, the banking system will have to intermediate a larger quantum of funds than is presently the case.